Personal data not only allows major businesses to track individuals behaviour, it also allows them to drive up prices
In 2019, the US Federal Trade Commission (FTC)to fine Facebookfive billion dollarsfor deceiving its usersin regard to its ability to keep their data and information private. The fine was the culmination of the US Governments investigation into Facebooks privacy practices, sparked by the that saw tens of millions of Facebook profiles leaked and used to predict US voters choices and target them with political campaign material.
Although this was hailed as a sign of regulators increasing willingness to clamp down on the dubious privacy practices of Big Tech companies, the fine will not necessarily change much. Facebook anticipated the charge and , indicating thateven afive billion dollar fine was something the organisation could take in its stride.
Competition exists between these players in terms of keeping user attention on their own platforms and not on those of their competitors.
More important than the money, though, was the lack of any deeper measures taken by the FTC. The settlement imposes no meaningful changes to the companys structure or financial incentives,which led to these violations, said FTC Commissioner Rohit Chopra . Nor does it include any restrictions on the companys mass surveillance or advertising tactics.In other words, it was a slap on the wrist (Facebook is expected to make almost $100 billion selling ads in 2020 alone).
The EU, by comparison, has been more proactive when it comes to regulating Big Tech firms handling of user data. This has been done partly through the General Data Protection Regulation, which came into force in 2018, but European authorities have also led the way in terms of addressing the problems related to digital platforms through antitrust enforcement.
Information oligopoly
What does this mean in a practical sense? It starts with recognising the state and goal of competition in the field. In an attempt to define its role in the technological boom of the past decade, data has variously been described as the new oil and as common as water, indicating both its potential value and its abundance. Neither of these generalisations is particularly useful or accurate, however.
Whats more important to note is that data is key to digital platforms because, when analysed closely, it can provide real-time knowledge of consumer behaviour across applications. This has led to an attention economy, in which Big Tech players work to capture users attention (and thus their data), build profiles of their choices and habits, and then sell those profiles to advertisers. Competition exists between these players in terms of keeping user attention on their own platforms and not on those of their competitors.
The system can leave consumers worse off than if they had never given access to their data in the first place.
High-level mergers such as Facebooks acquisitions 硃紳餃泭concentrate the digital-platform market. This reduces competition, making attention a scarce resource for advertisers. Since Facebooks business model (and indeed Google's) is based on selling ads to the highest bidder, this leads dominant digital platforms to favour advertising only high-cost items to consumers. In other words, the system can leave consumers worse off than if they had never given access to their data in the first place. On top of this, data privacy breaches, potential profiling and discrimination, and marketing to exploit personal vulnerabilities (e.g.泭) are all detrimental to consumers, while ensuring they receive no value in return for handing over their private data.
The question of how much we want technology companies to know about us has become of even greater interest since the coronavirus outbreak. Big Tech players such as Microsoft, Amazon and Palantir have been praised for stepping up to help the UK's National Health Service work out where important resources are most likely to be needed, butthis has also .泭
However,its important not to fall in the trap of a false dichotomy between health and privacy. Technology can and should be used during this emergency, and technology still can and should guarantee fundamental rights in our democracies.
Its academic
A frequently cited argumentis the so-called privacy paradox: the observation that consumers claim to care about preserving their privacy, but dont take steps to reduce the amount of data they share. However, consumer choices are complex: most have little to no understanding of data practices, and theres little transparency in such phrases as we may collect your personal information for marketing purposes or we may share your personal data with affiliates and trusted businesses. As a result, consumers are unable to understand the future costs of their choices, so cannot be held to be expressing a preference when accepting opaque privacy terms.
There are virtually no published papers in the past 10 years that used primary data from one of the five leading digital companies.
Again, the issue of competition is key here. Digital markets are, by their nature, difficult for new entrants to break into, as network effects create barriers to entry. Elusive data practices serve to strengthen these barriers, giving platform incumbents a competitive advantage by concealing information that would allow consumers to compare alternatives. Academic access to anonymised data could help to remove these barriers but it is another area in which Big Tech firms remain elusive. In the top-five economic journals, there are virtually no published papers in the past 10 years that used primary data from one of the five leading digital companies (i.e. Amazon, Apple, Facebook, Google or Microsoft) to tackle a question related to competition or competition policy. We currently struggle with very important policy questions in the digital space, and digital giants have not helped us much in finding answers.
Competitive spirit
Within this challenge, however, lies opportunity. Lack of competition in a market leads to a reduction in quality, and rapidly eroding consumer data protections stand as the quality reduction in this sector an example of competitive harm. Lets not forget, for instance, that in the mid-2000s, when Facebook was an upstart social media platform, it tried to differentiate itself from the then-market leader, Myspace. In particular, Facebook publicly pledged to protect privacy, but as its competition began to disappear, Facebook revoked its users ability to vote on changes to its privacy policies. Hence, competition and privacy protection are part of the same process.
Under EU Article 102, consumers are protected against such harm caused by abuse of dominance, and this gives European authorities an antitrust enforcement rationale to investigate big tech firms. As pressure mounts, the firms in question may opt to increase transparency in order to deflect criticisms of their opaque data practices, which could also allow for greater academic scrutiny. This, in turn, could improve consumer understanding of the choices and costs associated with data privacy. Of course, this all depends on authorities choosing to take action the twin pillars of antitrust enforcement and academic scrutiny must go together to have full effect.
This article was amended on 6 April 2020to reflect the coronavirus pandemic. The accompanying video was recorded before the UK Government-initiated lockdown.
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